How Columbia Banking Intends to Defend NIM as Rates Ease in 2026

Core Viewpoint - Columbia Banking System (COLB) is focusing on relationship deposits, funding mix shifts, and fee growth to protect its net interest margin (NIM) as the interest rate cycle changes [1] Group 1: NIM and Financial Performance - Columbia Banking's NIM improved to 3.84% in 3Q25 from 3.56% a year ago, with expectations of NIM being "just north of" 3.90% in 4Q25 and 1Q26 [2] - The bank's deposits are granular and diversified, with a focus on full-relationship funding and proactive repricing, targeting deposit betas around 50% for rate cuts to support NIM expansion [3][9] - Columbia Banking is expected to manage down $8 billion of inherited transactional loans over approximately eight quarters starting from 3Q25, reallocating towards relationship commercial and industrial (C&I) and owner-occupied commercial real estate (CRE) [5] Group 2: Strategic Initiatives and Synergies - The merger with Pacific Premier has increased cross-selling opportunities, generating over 1,200 referrals since closing, which has contributed to deposit inflows [4][9] - Management's near-term focus includes cost normalization after systems work in 1Q26 and achieving full synergy capture by 3Q26 [1] Group 3: Market Position and Competitors - Columbia Banking currently holds a Zacks Rank 3 (Hold), indicating a balanced outlook, with key points to monitor including the 1Q26 system conversion and quarterly NIM outcomes [6] - Key peers include East West Bancorp (Zacks Rank 2) and Zions Bancorporation (Zacks Rank 2), both of which are experiencing varying impacts on their NIM due to market conditions [7][8]